Question-and-Answer Session
Operator
Thank you. (Operator instructions) Our first question today comes from Kevin Maczka. Your line is open, and please state your company name, sir.
Kevin Maczka - BB&T Capital Markets
Kevin Maczka, BB&T Capital Markets. Good morning, everyone.
Greg Hyland
Good morning, Kevin.
Evan Hart
Good morning.
Kevin Maczka - BB&T Capital Markets
A question on the municipal customers that you are talking about. They are obviously pulling back projects, delaying projects, responding to the environment. And obviously the longer term need there is much better than their current funding environment. And I am just wondering what ultimately makes that change?
And you know we are talking about an increasingly challenged environment in terms of commercial construction outlook and financing. I am just wondering what ultimately makes that change, where their funding is more in line with their need.
Greg Hyland
Well, you know, Kevin, we have throughout 2008 we continued to see an increase in municipal spending on repair and replacement. In fact we were realizing the spending and it was pretty consistent we think with the need.
In fact, if you recall a year ago when we referenced the AWWA survey that a year ago that survey was calling for a 17% increase in year-over-year spending. We said we thought we would see 10, 11%. And actually we think probably for the year we did see that type of spending. In fact, I reference what happened to our orders at U.S. Pipe in September where they dropped 40% year-over-year and another 46% in October.
Interestingly, in July and August of this year our orders for U.S. Pipe were up 11%. So we saw, I guess in essence, we hit the wall or our market hit the wall in September. And I think that that’s not—we believe that it was related to the liquidity crisis. From what we currently hear on this in the marketplace that municipal financing became very, very scarce to non-existent and we think that the markets, even the municipal markets now are generally experiencing a liquidity crisis.
So I think what we saw come September was clearly a reaction to what was happening the overall, the bond market. And we believe that, as we said, once that starts loosening up—we would expect that it would loosen up—but we know that the markets are in some turmoil like we have never seen. But when that starts loosening up, and again I think it is important to point out that generally water systems, municipal water systems have some of the strongest ratings.
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